Fourth Level (FL) manufactures and sells 3D Printers. Each of its printers sells for $8,000 each....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Fourth Level (FL) manufactures and sells 3D Printers. Each of its printers sells for $8,000 each. manufacturing cost is $4,300 per printer At the time a printer is purchased, a customer can also buy a $350 non-refundable stored value card. The card allows the customer to purchase five (5) plastic filament "ink" replacement cartridges. The replacement cartridges sell for $90 each when purchased separately and cost $55 each to produce. The card expires two years from the date of purchase. Based on extensive experience with these cards, FL estimates that, on average, ninety percent (90%) of the stored value is used before expiration. In other words, on average, customers utilize the stored value cards 4.5 times before expiration. FL will finance the customer's purchase of the printer. An APR of 6% compounded monthly is used to determine the payments. The terms are $2,000 due at delivery and a promissory note for 23 monthly payments of $276.81 each. The monthly payments commence one month from the date of sale. The stored value cards cannot be financed. Assignment: 1. In a properly structured professional research memo, explain FL's accounting for revenue recognition under ASC Topic 606. Use the five-step process. You can assume that FL has established the creditworthiness of the customers who finance their printer purchase. 2. Prepare FL revenue recognition journal entries using the journal entry template assuming the following: a. Customer A pays cash for the printer and acquires the stored value card for $8,350. b. Customer A redeems her stored value card to obtain a single replacement cartridge. c. Customer B finances his purchase of the printer by making the down payment of $2,000 and giving FL a promissory note for 23 monthly payments of $276.81 each. d. Customer B makes the first monthly payment of $276.81. Fourth Level (FL) manufactures and sells 3D Printers. Each of its printers sells for $8,000 each. manufacturing cost is $4,300 per printer At the time a printer is purchased, a customer can also buy a $350 non-refundable stored value card. The card allows the customer to purchase five (5) plastic filament "ink" replacement cartridges. The replacement cartridges sell for $90 each when purchased separately and cost $55 each to produce. The card expires two years from the date of purchase. Based on extensive experience with these cards, FL estimates that, on average, ninety percent (90%) of the stored value is used before expiration. In other words, on average, customers utilize the stored value cards 4.5 times before expiration. FL will finance the customer's purchase of the printer. An APR of 6% compounded monthly is used to determine the payments. The terms are $2,000 due at delivery and a promissory note for 23 monthly payments of $276.81 each. The monthly payments commence one month from the date of sale. The stored value cards cannot be financed. Assignment: 1. In a properly structured professional research memo, explain FL's accounting for revenue recognition under ASC Topic 606. Use the five-step process. You can assume that FL has established the creditworthiness of the customers who finance their printer purchase. 2. Prepare FL revenue recognition journal entries using the journal entry template assuming the following: a. Customer A pays cash for the printer and acquires the stored value card for $8,350. b. Customer A redeems her stored value card to obtain a single replacement cartridge. c. Customer B finances his purchase of the printer by making the down payment of $2,000 and giving FL a promissory note for 23 monthly payments of $276.81 each. d. Customer B makes the first monthly payment of $276.81.
Expert Answer:
Answer rating: 100% (QA)
Amount in a Cash 8350 Contract Liability 350 Revenue 8000 ... View the full answer
Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
Posted Date:
Students also viewed these accounting questions
-
At the time a management group of RJR Nabisco initially considered engaging in a leveraged buyout, RJR's stock price was less than $70 per share. Ultimately, RJR was acquired by the firm Kohlberg,...
-
At the time a company prepays a cost: it credits an asset account and debits an expense account it debits an asset account to show the service or benefit it will receive in the future it debits an...
-
Under the allowance method, at the time a receivable is written off, net receivables Group of answer choices 1-will increase due to bad account being eliminated. w 2-ill decrease as the allowance...
-
Consider a situation where the marginal damage function is known and equal to D'(E)= d.E. The aggregate marginal abatement cost curve is given by -C'(E)=-bE where is random variable uniformly...
-
Find the smallest values for n = m so that Algorithm 4.4 can be used to approximate the integrals in Exercise 3 to within 106 of the actual value. In Exercise 3 T/4 (2y sin cos2 x) dy dx In xy dy dx...
-
Una partcula Q de 25kg vibra horizontalmente con MAS de acuerdo a las condiciones indicadas en la figura. OA OB 15cm OP = 1/3 OA T = Is B P es la posicin de la particula en t=0, donde empieza a...
-
Mann Company was organized on March 1 of the current year. Projected sales for each of the first three months of operations are as follows: The company expects to sell 20% of its merchandise for...
-
As completely as possible, sketch the value chain for Netflix from the production of content to viewer. Baseball great Yogi Berra, known more for his mangled phrasing than for his baseball prowess,...
-
You are selling an asset. You can earn an interest rate of 7% (per year) on your savings. You receive the following two (riskless) offers: Offer 1: Receive $400,000 today Offer 2: Receive $500,000 in...
-
Define I1 as an interaction variable created from two binary variables, D1 and D2. In a regression model containing only the variables D1, D2 and I1: a. The coefficient on I1 is the effect of D2 on...
-
Since almost every business (other than perfect competitor) has the ability to set its own price, can we conclude that almost all businesses are monopolists?
-
Write the java code of the interface IComputer that contains the followings: B/ The property IPAdress (number) with get and set assessors. The method Cost() that returns the total cost of a computer...
-
Keurig Dr Pepper, is a leading worldwide integrated brand owner, bottler, and distributor of nonalcoholic beverages. Key brands include Dr Pepper, Snapple, 7-UP, Mott's juices, A&W root beer, Canada...
-
Dozier Company produced and sold 1 , 0 0 0 units during its first month of operations. It reported the following costs and expenses for the month: Direct materials $ 7 2 , 0 0 0 Direct labor $ 3 6 ,...
-
For the vectors shown below where v V2 3, suppose you wanted to determine the values of A and B that would make Av Bv = -23. What are the two equations you would use? You should use, for example,...
-
Interval International is an online travel service that books to resorts for Timeshare Owners. Owners have booked trips for decades, but changes in technology have transformed the travel business in...
-
Dilkarn an employee in Alberta is paid bi-weekly. Each pay the employee receives a base salary of $3,050.00 plus a taxable car allowance of $200.00. Employees enjoy a benefit plan that includes...
-
Is times interest earned meaningful for utilities? Why or why not?
-
a. Auto manufacturing b. Dental services c. Auto repair d. Costume making Required: For each of the given types of industries, give an example of a firm that would use job-order costing. Then, give...
-
Cal-Lite Products Inc. manufactures a line of food products that appeals to persons interested in weight loss. To stimulate sales, Cal-Lite includes cash refund coupons in many of its products....
-
What is normal costing? How does it differ from actual costing?
-
Estimate value of \(\varphi_{\mathrm{d}}\) in the tank and power \(\mathrm{P}\) required for Example 13-7 with \(\mathrm{H}_{\text {tank }}=\mathrm{d}_{\text {tank }}=0.8279 \mathrm{~m}\) and a...
-
For the extraction in Example 13-7, suppose we decide to have \(\mathrm{H}_{\text {tank }}=\) \(2 \mathrm{~d}_{\text {tank }}\) and want a 1.5 minute residence time. Find the tank dimensions. Example...
-
Equilibrium data for extraction of methylcyclohexane (A) from nheptane (D) into aniline (S) are given in Table 13-8. Compare batch extractions of \(20 \mathrm{~kg}\) of \(40 \mathrm{wt} \%\)...
Study smarter with the SolutionInn App